Milk price wars just the beginning if Costco comes to town

THE milk price wars are about to include the chocolate, teddy bear and casket price wars as Costco's buying power, competitive prices and import rate mean traditional grocery stores have to step up their game.

It means competitive environment at Ipswich is going to change.

University of Southern Queensland marketing and consumer behaviour researcher Dr Rumman Hassan said traditionally regional towns were dominated by the big two; Coles and Woolworths.

"The nature of the competitive intensity of the retail sector will change. We will probably see more price wars, it will be taken to a different level. If that happens the regular consumer will see the benefits of that because a rational consumer will pick something that offers a greater value," Dr Hassan said.

> > EXPLAINED: What the 'Costco effect' means for Ipswich

Dr Hassan said while competitive prices were good news for buyers, it meant suppliers would need to lower their overheads to cover costs.

"For the consumer that's great but what I'm concerned about is will that have a trickle down effect on the suppliers; they will now have to cut down on their margins," he said.

"It's a fairly complex scenario because suppliers traditionally supply to Coles and Woolies now have Costco as well and Costco being such a large buyer will seem like a very attractive proposition for these suppliers.

"We are going to see some parties benefiting, some perhaps feeling the pinch."



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